Case Law Details
DCIT Vs Jay Properties Private Limited (ITAT Mumbai)
ITAT Mumbai held that rental income from giving out commercial properties for compensation as per Memorandum of Association (MOA) is to be treated as ‘business income’ and not as ‘income from house property’.
Facts- The assessee company is engaged in the business of dealing in real estate properties, development, construction, etc and was investing funds in properties directly or indirectly by acquisition of shares or by joint ventures. The assessee company also had earnings from taking on compensation, commercial properties and giving such property for compensation with no profit or loss. The assessee filed its return of income dated 25.09.2012, declaring loss of Rs.22,89,74,129/- and the same was processed u/s. 143(1) of the Act. The assessee’s case was selected for scrutiny and the assessment order dated 3 1.03.2016 was passed u/s. 143(3) where the A.O. determined the total income at Rs.13,53,79,120/- as income from business services under the head ‘income from other sources’ on the ground that the assessee company was not the owner of the properties in which the assessee had alleged to have received the rental income, thereby disallowing the deduction claimed by the assessee u/s. 23(1A) and u/s. 24A of the Act.
The assessee was in appeal before the ld. CIT(A), challenging the assessment. CIT(A) accepted the contention of the assessee that the rental income was to be assessed as ‘income from business’ thereby holding that the same is to be treated as ‘income from business’ for the impugned year. CIT(A) allowed the expenses claimed by the assessee as expenses incurred for earning such income and that the same pertain to business activities and had allowed it u/s. 37(1) of the Act.
Being aggrieved, revenue is in appeal before us.
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